Critical Theory and Entrepreneurship
Critical Theory: Challenging the Myth of the Heroic Entrepreneur
Most entrepreneurship literature takes a "functionalist" perspective: it assumes an objective reality where success is purely a result of hard work and rational economics. Critical Theory argues that this view is a lie.
Attributed to Max Horkheimer (1937) and the Frankfurt School of sociology, Critical Theory combines Marxian and Kantian ideas to critique society. It aims not just to explain the world, but to change it.
The Goal: Emancipation
Critical theorists aim to liberate humans from the circumstances that enslave them—including the ideological chains of capitalism. Alvesson and Willmot (1992) define this goal as:
"Emancipation describes the process through which individuals and groups become freed from repressive social and ideological conditions, in particular those that place socially unnecessary restrictions upon the development and articulation of human consciousness."
The Myth of the "Heroic White Male"
Ogbor (2000) argues that the standard story of entrepreneurship reflects a heroic, white, male bias. He frames the discourse as ethnocentric, pointing out that research on minority entrepreneurship often focuses on helping them "become more like whites."
This bias reinforces the myth that non-dominant groups possess psychological characteristics that inhibit development. In reality, the barriers are often structural.
Evidence of Bias: The Funding Gap
Critical Theory suggests that these biases lead to material discrimination. Recent data on Venture Capital (VC) investment supports this claim:
- Racial Disparity: According to Crunchbase data (2020), Black and Latinx founders received only 2.6% of total VC funding, despite representing over 30% of the US population.
- Gender Disparity: In 2020, startups founded solely by women received just 2.3% of global VC funding.
Government Rhetoric: Legitimization vs. Subjugation
Perren and Jennings (2005) argue that governments use entrepreneurship rhetoric to manipulate the population. By celebrating the "small business owner," the state legitimizes the economic status quo while simultaneously subjugating workers into believing their poverty is a personal failure rather than a systemic one.
Critical Theory vs. Emancipation Theory
While related, Critical Theory differs from the more optimistic Emancipation Theory.
- Emancipation Theory: Views entrepreneurship as a tool for freedom. It argues that starting a business frees you from the "slavery" of employment.
- Critical Theory: Questions if entrepreneurship is actually a trap. It asks if the "hustle" is just another form of ideological slavery, convincing people to sacrifice their health and well-being to uphold a capitalist system that benefits the elite.
Video: A Primer on Critical Theory
References
Alvesson, M., & Willmott, H. (1992). On the idea of emancipation in management and organization studies. Academy of Management Review, 17(3), 432-464.
Jennings, P. L., Perren, L., & Carter, S. (2005). Guest editors’ introduction: Alternative perspectives on entrepreneurship research. Entrepreneurship Theory and Practice, 29(2), 145-152.
Ogbor, J. O. (2000). Mythicizing and reification in entrepreneurial discourse: Ideology‐critique of entrepreneurial studies. Journal of Management Studies, 37(5), 605-635.
Perren, L., & Jennings, P. L. (2005). Government discourses on entrepreneurship: issues of legitimization, subjugation, and power. Entrepreneurship Theory and Practice, 29(2), 173-184.
